Hansard debates

Mrs McARTHUR (Western Victoria) (10:57): I rise today to speak in strong opposition to the Justice Legislation Miscellaneous Amendments Bill 2019. This bill is a shameful disgrace and shows exactly who pulls the strings of the Andrews government. It is a kowtow to some of the largest donors to the Labor Party. It is a bill to line the pockets of ambulance-chasing lawyers. This bill is anti-victim, anti-plaintiff, anti-justice and anti-business, and at a time when all governments are calling on business to create jobs, this government is intent on making that task even harder.

The legislation, if passed, removes the more than 200-year-old prohibition that lawyers are only able to charge a fair and reasonable fee for their services. Instead Victoria will become the mecca of litigators, where they will charge massive commissions on the damages awarded to the very victims they are meant to represent. This practice is currently banned in all Australian jurisdictions. But more so, in their intent to grow the pool and therefore the commission that these lawyers can charge, this bill allows a lawyer to take a share of the proceeds of class members who have never been told that it might happen, have never agreed to such an arrangement, have never had the opportunity to negotiate a better or different deal and in many cases will not even know it is happening. The intent of this would be laughable if it was not so serious.

Under this new regime this bill creates conflicts of interest never seen before, at the expense of the victims who have been most wronged in our community. This bill makes it clear that class actions can be run in the name of Victorians on an opt-out basis rather than an opt-in basis. A class action can be run in your name without your knowledge.

Let me clarify: class actions have a noble aim, which I support wholeheartedly. They are a vehicle that allows plaintiffs to join together collectively with a shared view of being wronged. Members of the action share the risks and costs, and this allows for an efficient and effective way to seek justice. When run in their purest form they have delivered many great outcomes, and what comes to mind most vividly are the victims of the Black Saturday bushfires.

But unfortunately class actions in this country have been hijacked. They are no longer a vehicle of justice but instead a vehicle for profits. Their noble intention has been completely corrupted by predatory practices at the expense of victims and justice. This bill flies in the face of the fundamental obligation of a lawyer to place the interests of their client above their own and belittles their judiciary obligations. Do not just take my word for it; the Victorian Law Reform Commission noted that introducing:

… contingency fees would intensify the risk that the lawyer’s financial interest in the outcome of litigation will prevail over their duty to their client.

And financial interest is what this legislation is about. Last year Maurice Blackburn donated $554 805 to the Australian Labor Party and affiliated entities. In the last financial year Maurice Blackburn made 39 separate contributions to the Victorian ALP totalling $122 887. This made them the largest non-union donor to the Labor Party. And then—surprise, surprise—this bill turns up. Maurice Blackburn are the largest filers of class actions in the country and file over two and a half times the amount of class action lawsuits as their closest competitors. I have heard, and believe it to be true, that the most concerted lobbying of the crossbench on this bill was done by none other than representatives of Maurice Blackburn. The ambulance chasers—whose spin is about fighting for fair but in reality are fighting for fees—have been out and about in this place to lobby for support for this legislation and to make their lives better.

I have with me here their briefing note that is trying to hoodwink crossbenchers into believing that in actual fact this bill is all about access to justice and increasing the returns for class members. This is complete nonsense, and if any of my crossbench colleagues in this house believe them, I ask them this: what stakeholder comes into this place and lobbies you, saying, ‘Please pass this bill so that we can make less money’? That is right—actually no-one. Buried deep in the fine print of the document that they provided is a detail claiming that the victims would have been better off under a 25 per cent contingency fee arrangement on class actions run by Maurice Blackburn. It is puzzling because point 27.4 of submission 13 to the Victorian Law Reform Commission’s review of litigation funding and group proceedings, the report of which was published in 2018, reads:

… we would support:

(a) consideration to capping the percentage for the contingency fee. As the empirical evidence above demonstrates a cap of 30% or 35% would produce better outcomes on average …

Who was it that made this submission pushing for a 30 per cent to 35 per cent commission on damages awarded to successful plaintiffs of class actions? None other than Maurice Blackburn: the very people who present to the crossbench this bald-faced lie that they are the only seeking 25 per cent. That in itself is alarming. For the information of my colleagues, I have had experts make calculations, based on Maurice Blackburn’s own numbers that they presented to crossbenchers, which showed that under a 25 per cent contingency fee arrangement they would have made $78 million more in profits. If allowed, with a 35 per cent contingency fee as proposed in this submission to the Victorian Law Reform Commission, their profits would have increased by an additional $224.8 million—remember: $224.8 million extra profit. Time and time again the wealthy legal professionals on La Trobe Street prove themselves to be fighting not for increased access to justice but for increased fees. This startling information should serve to remind this chamber of the vested interests with close financial links to the government, who are seeking more profits at the expense of victims and justice.

For me, the appalling nature of this bill is best demonstrated by examining the class action I mentioned earlier: the action run by Maurice Blackburn on behalf of the Black Saturday bushfire victims who had lost everything—tragically in some cases even the lives of their family members.

In that class action, by the way, Maurice Blackburn charged administrative costs of $1 million every month and withheld the settlement money from victims for over two years. Of the $794 million settlement, it is reported that Maurice Blackburn charged $100 million in legal fees. If this bill had been passed at the time of settlement and Maurice Blackburn had been allowed to charge what they submitted to the Victorian Law Reform Commission, this figure would have been $270 million—an extra $170 million if this legislation was in place when they got their $100 million. This bill would have given them access to that extra $170 million out of the pockets of the people who had lost everything. It is not just not fair for this legislation to pass; anyone who votes for this bill is seriously misguided, not by the facts but by the fiction of the government and one of their largest donors.

You only need to look at the explosion of offshore litigation funders to know where this bill is taking us. Data shows that in 2016 successful class members took home on average 59 per cent of the proceeds awarded to them in class actions backed by a funder. By 2019 this percentage had reduced to just 39 per cent. The Australian Law Reform Commission found that without a funder involved class members received on average 85 per cent of the damages awarded to them. The intent of this bill solidifies those low returns for the people who have been wronged by injustices. It is unfair and allows for massive profits at their expense. The returns of litigation funders backing Australian class actions are 17 times the average returns of investing in the Australian stock exchange and 212 times the benchmark returns earned by US hedge funds. As Chris Merritt recently wrote in the Australian:

Increased access to justice? Give me a break. This is all about increased access to the latest BMW.

Everything else is marketing.

In an investor presentation Omni Bridgeway, the largest litigation funder in Australia, revealed that they made 3.7 times more on Australian cases compared to those backed in the United States and that their deployed investments have increased from around $100 million in financial year 2015 to around $650 million in half-financial year 2020. The standout of the presentation, though, is the revelation that if this bill passes, Omni is considering going head to head with the likes of Maurice Blackburn and Slater and Gordon for contingency fees by, quote, establishing ‘its own law firm and seeking contingency fee returns’.

There also remain very real questions about what discussions have gone on behind closed doors regarding this bill. Three months ago I sought information through freedom-of-information requests detailing any meetings between the Attorney-General, the Premier and the Department of Justice and Community Safety and Maurice Blackburn on this bill. This is extremely important information considering the significant financial contributions they make to the Labor Party and the increased profits they will make if this bill passes. Still to this day, and notably well outside reporting time frames, I am yet to receive that information. On this matter I can confirm to the house that, given the serious questions that need to be answered on the genesis of this legislation and having not received the information, I have referred the unwillingness of the government to provide me with the information to the Independent Broad-based Anti-corruption Commission and the Office of the Victorian Information Commissioner for investigation. It is a disgrace that this information has not been provided prior to the debate on this legislation. Victorians rightly deserve the answers to these questions, especially under the current clouds of corruption and branch stacking in the Labor Party.

In my first 17 months in this Parliament I have seen this government propose some appalling legislation, but this one takes the cake. This bill ignores the unconscionable returns on investments that are already earned through funding litigation in this way. It will reduce the damages going to victims most wronged in our community. It will not improve access to justice; it will improve access to fees. It will create more serious conflicts of interest between plaintiff lawyers and the people they are representing. It will mean a class action can be run in your name without your prior consent, and it will throw out more than 200 years of practice that a lawyer can only charge you a fair and reasonable fee. Class members will receive less money. The Labor law firms will receive more. Nothing is clearer to me than that this bill must be rejected by this house, and anyone who seeks to enable its practice does not have the interests of justice in mind.

I implore all members of the crossbench to vote against this bill, especially those on the crossbench who have been targeted by vested interests in the most spectacular way. If the past week’s events have shown us anything, it is that this Labor government is entirely beholden to faceless men and backroom deals. It has shown us that they are corrupt, have a complete disregard for the laws of our state and are willing to use taxpayer-employed staffers to do whatever bidding they please. Members of the crossbench, do not be complicit in enabling more dodgy backroom deals to the benefit of more faceless men, by voting down this legislation. The Victorian Parliament has an opportunity here to demonstrate that, unlike ministers of this government, we are beholden to the people of the state—the people of Victoria, those silent people out there who think that we are doing what is right and in their best interests—and beholden to justice and transparency. We should not be beholden to big donors, vested interests and secrecy. I implore the crossbench and all members to vote against this unjust bill.